If you are a vat registered trader in the UK you would then have to pay vat on many services and goods but are you aware that claiming vat back can improve your business cash flow? In case you have already paid vat once on any services or goods required for your company or paid vat on it in another eu country then you can certainly submit an application for a vat refund.
Most eu countries now utilize the system of vat or value added tax on movement of goods and services as a way of collecting more revenue and plugging tax leaks. The UK too has shifted to vat and when you operate a company in the UK then you’ll need to make an application for vat registration when your last 12 month sales turnover touches ?70,000. Being a vat registered trader you will have to pay and collect vat on all purchases and sales in connection with your company depending on the classification of these goods and services according to the HM Revenue and Customs or hmrc vat department.
However, to prevent double taxation on such goods and services, the hmrc department has produced vat rules that will permit you to definitely claim vat back on any goods or services purchased for the business. This amount can be recovered even if you have paid that vat in another eu country that follows vat, provided you can show documentary proof which includes the vat invoice or vat receipt. In case you have imported goods into the UK after paying vat in the country of origin or have attended a trade fair inside a foreign eu country where vat has been charged to you then these can be claimed back after you fill the necessary vat reclaim form.
You should hire an excellent vat agent with complete knowledge of uk vat and eu vat rules so that your vat refund claim is passed within the shortest time possible. You will have a time limit of 9 months following the end of the calendar year once you had first paid your vat on those goods or services. You can use several online vat services provided by hmrc vat including filing online claims for vat refunds. You will have to register on the hmrc website before you fill the required online vat form for vat reclaim. The form is then forwarded to the member eu country where you may have paid vat initially, together with scans of vat invoices that you might have to affix to your application.
As soon as you receive a confirmation usually within 15 days of receipt of the refund claim, it will require around 4 months for the claim to be approved from that member country before you can get your vat back. In case any additional clarification or documents are required then you should expect a delay of four more months and hence it is essential to have it right the very first time itself. Your vat refund may be deposited in a bank account which you specify within or outside the UK. However, this amount will be in the currency of the country of origin and will have to be changed into sterling pounds before it can be transferred into your UK banking account.
Even though the process to reclaim vat back is a bit tedious, an efficient vat agent can apply for vat refunds on your behalf and inform you about the status of your applications. The fact is that claiming vat back can indeed enhance your business income by pumping back that double-taxed amount directly into your business.